Stephen Schueler: Non-food as a business engine

Non-food as a business engine in

Russian RetailStephen Schueler

Procter and Gamble4 Feb 2011

P&G IN RUSSIA

Who wants to increase your market share?

What determines your ability to drive market

share?

Your shopper!Top drivers to increase your

market share:

Attract New

Shoppers

Attract New

Shoppers

Build Loyalty of Existing Shoppers

Build Loyalty of Existing Shoppers

Win with High

Spenders

Win with High

Spenders

WHY NON-FOOD

CATEGORIES ARE

IMPORTANT TO WIN WITH

SHOPPERS?

1.Non-Food has strong potential with

your existing shoppers

food Dairy 59Juice 49Cheese 44Biscuits 46

non-foodHand Dish 28 Fem Care 31Shampoo 32

Dentifrice 34

Size of the prize = 400 mln.$ Size of the prize = 400 mln.$ for HM channelfor HM channel

% of store shoppers buying category in this store (Hypermarkets)

% of store shoppers buying category in this store (Hypermarkets)

2. Non-Food helps shoppers to choose

your store for Bulk Shopping

Bulk shopping   Refill shopping

Laundry & Home Care Bakery

Coffee & Tea Milk& Dairy

Shampoo & Shower Fruits & Vegetables

Toilet Paper & Towels Soft drinks& Juices

Fem Care Cheese

Oral Care Fresh Meat & Poultry

Fresh Meat & Poultry Snacks

Cheese Toilet Paper & Towels

Soft drinks & Juices Coffee& Tea

Fruits & Vegetables Oral CareNon-food categories are highlightedNon-food categories are highlighted

Top powerful categories that define

shoppers’ satisfaction by the store:

Value of Bulk trip = 4.7x Value of Refill trip Value of Bulk trip = 4.7x Value of Refill trip

How to leverage non-How to leverage non-food food

to win with Your to win with Your ShopperShopper

Three Business Ideas:1. Improve Shopping

experience in Beauty Care.

2. Leverage Innovation in Non-Food − Attract new Shoppers− Get disproportionate

share by being first with new items.

3. Win with Young Families – Heavy Spenders

… win her manImportance of: Russ

iaWE

Being attractive to men, %

90 41

Having stylish feminine clothes, %

89 57

She needs to be beautiful to… She needs to be beautiful to…

1.1. Russian consumers are Russian consumers are “Thirsty for Beauty” “Thirsty for Beauty”

P&G is committed to P&G is committed to develop Beauty develop Beauty

business in Russiabusiness in Russia• Plays in 12 out of 13 Beauty Categories

• Market leader in 5 out of 12

• Focus on Category Development to drive basket size

HAIR CARE EXAMPLE:

Conditioners /Treatments – significant growth Potential vs. Shampoo behind increase in penetration and consumption.

• Plays in 12 out of 13 Beauty Categories

• Market leader in 5 out of 12

• Focus on Category Development to drive basket size

HAIR CARE EXAMPLE:

Conditioners /Treatments – significant growth Potential vs. Shampoo behind increase in penetration and consumption.

45 5288

335

0

50

100

150

200

250

300

350

Penetration CDI

CONDITIONERS

SHAMPOOS

P&G is P&G is committed to committed to

develop Beauty develop Beauty business in business in

RussiaRussia

• Conditioner/treatment driven innovation

• Trade Across through Shelving by collection: co-location of Shampoo/Conditioners/ Treatments

Category Turnover growth + 13%,

Category growth up to 6 %

Beauty Categories are the most Beauty Categories are the most sensitive to shopping atmosphere sensitive to shopping atmosphere

and new innovationand new innovation• Beauty Department Objective within Food retailer: Create better Shopping Environment:• Enjoyable/emotional• Spends more time/ browsing • Trying new things

• Beauty Department Objective within Food retailer: Create better Shopping Environment:• Enjoyable/emotional• Spends more time/ browsing • Trying new things

Diapers

Fabric Softeners

2. Attract new shoppers via 2. Attract new shoppers via innovationinnovation

45% of Russian 45% of Russian shoppersshoppers

are experience-driven. This means that they:

• enjoy shopping and like to shop around before making a purchase;• need a comfortable shopping experience;• are driven by new items.

are experience-driven. This means that they:

• enjoy shopping and like to shop around before making a purchase;• need a comfortable shopping experience;• are driven by new items.

Non-food suppliers are investing Non-food suppliers are investing heavily in TVheavily in TV

creating strong demand for new creating strong demand for new productsproducts

GRPs 30+ 2009 2010

Food 289 655 311 713

Non-Food 705 404 768 122

Non-food advertisers are highlighted

TOP 10 advertisers 2010

1 Procter & Gamble

2 Henkel Group

3 L'Oreal

4 Mars-Russia

5 Unilever

6 Nestle

7 Reckitt Benckiser

8 Danone

9 Wimm-Bill-Dann10 Beeline

1. In-Store Support – massive in-store communication linked to TV

2. On-line announcement of new product launches/marketing campaigns

Get Disproportionate share of New Get Disproportionate share of New Items!Items!

3. Winning with Young Families3. Winning with Young FamiliesChild birth is a point of change in Child birth is a point of change in values Now baby is #1, #2 and #3 values Now baby is #1, #2 and #3

spending priorityspending priority

Now she has less time in her new role:

=>she visits less stores and shop more in E-commerce ;

Now she has less time in her new role:

=>she visits less stores and shop more in E-commerce ;

Spending IndexTotal

RussiaModern Trade

Young parents 113 112Mature parents 120 101Parents with teenagers 106 94Families w/o children 121 97Adults 87 108Seniors 81 86

Families spend more, Families spend more, especially younger ones… especially younger ones…

especially in Modern Trade especially in Modern Trade

GFK, 2009GFK, 2009

Baby Diapers is the biggest Baby Diapers is the biggest categorycategory

in moms basket in moms basket

GFK, 2009GFK, 2009

• Baby Diapers is the Destination categories for Young Moms

• Shoppers Basket is 4x times bigger in case diapers are in

• Baby Diapers is the Destination categories for Young Moms

• Shoppers Basket is 4x times bigger in case diapers are in Total Basket Spending on Baby,

% in valueTotal Basket Spending on Baby,

% in valueShoppers of Hypermarkets, 1HY 10  

Moscow

Russia w/o Moscow

Diapers & Wipes 32,9 42,7Baby Food 27,3 38,2Clothes & Shoes 15,7 5,6Other (incl. toys, cosmetics) 24,1 13,5

Pampers Charity programPampers Charity program

Partnering with Retailers and leading Partnering with Retailers and leading websiteswebsites

Pampers Charity programPampers Charity program

Partnering with Retailers and leading Partnering with Retailers and leading websiteswebsites

P&G donates 1 vaccine for UNICEF with every purchased pack of Pampers Communication tools: - Internet (mail.ru) - In-Store

In SummaryKey Partnership Opportunities to drive Non-Food in Food Retailer:Bring in New Shoppers:

•Co-Marketing programs (e.g. Pampers Unisef)

•E-media partnership with ManufacturersDrive Loyalty of Existing Shoppers:

•Drive Basket via regimen Beauty Purchases

•Novelties exploitation in-Store;

•Improve Shopping Experience on BeautyAttract Heavy Spenders

•Win with Young Families by leveraging Diapers as destination category

Thank you!Thank you!